IRS: Cheapest qualifying family health-insurance plan will be $20K

posted at 1:51 pm on February 1, 2013 by Ed Morrissey

Starting next year, the IRS will assume responsibility for telling Americans just what kind of health insurance they must buy in order to … well, breathe free air, or something. Taxpayers will have to submit proof of health-insurance coverage along with their W-2s, and that health insurance has to meet minimum guidelines, which are classified by the IRS as “bronze,” the lowest of four tiers identified for tax purposes. And the average cost of a bronze plan for a family of four? Such a family will have to fork out twenty thousand dollars in health insurance:

In a final regulation issued Wednesday, the Internal Revenue Service (IRS) assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family will cost $20,000 for the year.

Under Obamacare, Americans will be required to buy health insurance or pay a penalty to the IRS.

The IRS’s assumption that the cheapest plan for a family will cost $20,000 per year is found in examples the IRS gives to help people understand how to calculate the penalty they will need to pay the government if they do not buy a mandated health plan.

The examples point to families of four and families of five, both of which the IRS expects in its assumptions to pay a minimum of $20,000 per year for a bronze plan.

If you’re thinking that a family could buy a good solid family car for that kind of cash and do better, you’d be right. Let’s assume that a family of four has a wellness check for each adult once a year, and the kids have two. If a full-scale wellness check costs $500 — and it’s probably considerably less — that’s $3,000. If little Susie breaks her leg on a jungle gym at school, add in another $1000 for emergency room treatment and ongoing follow-up. Mom may get a mammogram for another $1000. That still brings us to $5000, or only a quarter of what they’re paying for coverage every single year under the new regulations.

Of course, one or more of them may end up in the hospital, at which point the coverage costs get a little more rational. However, I just had outpatient back surgery, which cost in total less than the plan costs assumed by the IRS as a minimum (~$13,000, most of it covered by insurance, including doctors, hospital, anesthesiologist, follow-ups). Besides, until the passage of ObamaCare, a family could choose to purchase hospitalization coverage (aka “catastrophic” insurance) rather than comprehensive, and choose to treat routine maintenance and non-hospitalization costs through pre-tax health-savings accounts (HSAs). Most families would save a fortune in doing so, and the elimination of third-party payers in the system would restore real price signals, which would actually bend the cost curve downward. Families might choose comprehensive insurance anyway to guard against catastrophic risk, but before ObamaCare, they at least had the opportunity to choose a wiser path.

Instead, if you choose financial sanity, this is what happens:

Using the conditions laid out in the regulations, the IRS calculates that a family earning $120,000 per year that did not buy insurance would need to pay a “penalty” (a word the IRS still uses despite the Supreme Court ruling that it is in fact a “tax”) of $2,400 in 2016.

Heck, even that sounds like less of an incentive when you stack it up against the projected retail costs of the care and the premiums. Unfortunately, that choice will be stripped from most consumers, as the hospitalization-only insurance plans will be dismantled under ObamaCare. Families will be stuck paying far more in coverage than they’ll spend on care, and taxpayers will be stuck subsidizing those costs for families that earn less than $88,000 a year (400% of poverty line).

Where will all that extra money go? It’s going to end up subsidizing the high-risk members of the risk pool, who will no longer have to pay a significantly higher premium based on their own risk, and for older members of the risk pool, who utilize medical providers far more often. It’s a shell game, and it’s the taxpayers who are the marks.

• Lower health-care costs. One key talking point for ObamaCare was that it would reduce the cost of insurance, especially for non-group insurance. The president, citing the work of several health-policy experts, claimed that improved care coordination, investments in information technology, and more efficient marketing through exchanges would save the typical family $2,500 per year.

That was then. Now, even advocates for the law acknowledge that premiums are going up. In analyses conducted for the states of Wisconsin, Minnesota and Colorado, Jonathan Gruber of MIT forecasts that premiums in the non-group market will rise by 19% to 30% due to the law. Other estimates are even higher. The actuarial firm Milliman predicts that non-group premiums in Ohio will rise by 55%-85%. Maine, Oregon and Nevada have sponsored their own studies, all of which reach essentially the same conclusion. …

• Smaller deficits. Increases in the estimated impact of the law on private insurance premiums, along with increases in the estimated cost of health care more generally, have led the Congressional Budget Office to increase its estimate of the budget cost of the law’s coverage expansion. In 2010, CBO estimated the cost per year of expanding coverage at $154 billion; by 2012, the estimated cost grew to $186 billion. Yet CBO still scores the law as reducing the deficit.

How can this be? The positive budget score turns on the fact that the estimated revenues to pay for the law have risen along with its costs. The single largest source of these revenues? Money taken from Medicare in the form of lower Medicare payment rates, mostly in the law’s out-years. Since the law’s passage, however, Congress and the president have undone various scheduled Medicare cuts—including some prescribed by the law itself. ….

• Preservation of existing insurance. After the Supreme Court upheld the constitutionality of health reform in June 2012, President Obama said, “If you’re one of the more than 250 million Americans who already have health insurance, you will keep your insurance.” This theme ran throughout the selling of ObamaCare: People who have insurance would not have their current arrangements disrupted.

This claim is obviously false. Indeed, disruption of people’s existing insurance is one of the law’s stated goals. On one hand, the law seeks to increase the generosity of policies that it deems too stingy, by limiting deductibles and mandating coverage that the secretary of Health and Human Services thinks is “essential,” whether or not the policyholder can afford it. On the other hand, the law seeks to reduce the generosity of policies that it deems too extravagant, by imposing the “Cadillac tax” on costly insurance plans.

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Absolutely. My company is partnering with them now. They get the summary data from actual claims through arrangements with TPAs. For paying clients, they can also rate providers (hospitals) by cost and link in benefits and doctor information.

Btw, their info on medication is great! I was paying ~$100/month for meds and found some alternatives (which I ran past my doctor) which came out to around $2/mo. Great info!

karenhasfreedom on February 1, 2013 at 3:48 PM
Simple. The MSM and Uncle Sugar Union will just go after the fat cats. That is until there are no more fat cats. That is when I suspect the ‘fixable’ crowd will start for the exits, after they are blocked.
Limerick on February 1, 2013 at 3:52 PM

But with implementation next year, even the press can’t hide these gruesome facts from the low information voters. I predict almost every company is going to have to drop coverage, unless they are Fortune 500 and even they will have to drastically cut employees to pay for all of this.

I apologize for nor returning your hello yesterday, I was lurking though and caught it, plus I am preparing to get my FEMA camp number after my meeting two days ago, I asked some uncomfortable questions about our plan to socially engineer, and was told it is a done deal, shut up and color, unfortunately for them, I bow to no one, so guessing they may decide I need reeducated :) Not happening either!

Gee, who could have predicted this? You make it illegal to sell insurance that just covers major medical and outlaw significant deductables, mandate coverage of pre-existing conditions and elminate lifetime caps and prices go up. I’m shocked, shocked, I say.

I have written before and will write again that your analysis Ed is once again that Obama is just really bad at math instead of knowing full well a system that requires $20000/yr from families will cause an outcry and collapse of the free market Health System.

Seriously ED why don’t you just get friggin honest that this is by DESIGN and QUIT!!! treating it like a real health care solution by amateurs who just can’t get their do-gooderism correct.

I come to HotAir to meet others who aren’t in a fog about the situation. please join that conversation and the assumptions that go with it.

OBAMA IS A BAD GUY!!! Let’s get that straight Ed and talk about issues from there. Maybe we could win the conversation that the b@stard wants to ruin the country for his own ends.

Obamacare, eliminating with #1 cause of bankruptcy declarations in America, most of them middle class.

lester on November 25, 2012 at 10:48 PM

And I stand by that. Unfortunately you don’t have enough intelligence or capability to make an argument, so as usual do a hit and run away.

lester on February 1, 2013 at 4:40 PM

Whoa! Wait a minute, Les. Are you actually claiming that Obamacare will do away with medical bankruptcies? Seriously?

LMFAO!

Listen, dude, I am from Britain where we have this little thingie called the NHS and GUESS WHAT? WE STILL HAVE MEDICAL BANKRUPTCIES.

Do you want to know why?

It’s because so much that YOU take for granted here (like steroid shots, cataract surgery, hip/knee replacements, etc) is often designated as “ELECTIVE SURGERY.” If you want to have a procedure, THEN YOU HAVE TO PAY FOR IT. A lot of drugs that are commonly covered in the US are not paid for by the NHS. Many are LIFE-SAVING. If you want to take them, THEN YOU HAVE TO PAY FOR IT. Then, there’s the whole thing about the FACT that the UK has some of the worse cancer and cardiac survival rates in the developed world. This is because waiting periods for surgical or other treatment can be a YEAR OR MORE. Once again, if you want to take charge of your own health and life, THEN YOU HAVE TO PAY FOR IT.

Now, there are private insurance policies, doctors, and hospitals in the UK, but they are expensive. Most people cannot afford them. So, when they do get sick, they almost always do not have private insurance. They mortgage their homes, run up credit cards, borrow money, etc, JUST LIKE AMERICANS.

You really need to let the scales fall from your eyes. Think about this for a sec: We also have universal dental care. Are the British known for the excellent condition of their teeth or was, say, Austin Powers’ teeth representative of what the reputation of our teeth is (not mine…I’m positively anal about dental hygiene. I DIDN’T want my teeth to look like everyone else’s).

My Progressive Little Ponyland may be a state of mind, but it will never be a reality.

If you think our health care system is plagued by fraud now (and it is, Medicare alone accounts for over $30 billion in fraud every year), it is going to get exponentially worse once Obamacare is in full force. What a friggin’ disaster this thing is.

AZCoyote on February 1, 2013 at 3:36 PM

Medicare is the paid into (2.9% I believe) fund for seniors; those
over the age of 65. Any fraud in this category is probably with
health providers. Seniors do not receive dental care.

Medicaid is the “free medical arm” of welfare. Most of the fraud
is more than likely in this category. Children of welfare moms
receive free dental care.

I am unsure which category persons with disabilities fall into,
however, this area is ripe with fraud also.

Lester is obviously pretty stupid – love to have him explain himself. You know who was right about Obamacare? Business and their benefit consultants. Almost completely right. People like Lester almost completely wrong.

Okay, back now. Looks like everyone enjoyed today’s Photoshop quickies. Good. 128 views since they went up so I will presume that everyone has had a chance to see them. I will take them down in a minute or two from now. So if you want copies, copy them off now. I have something I want to share with MarshFox. That will be going up in the place of what is there now. ; )

People like Lester and the rest of their ilk actually threaten your families. If they were to walk in your house you would do more than just whine about it on a website. Conservatives have lost all spine.

And while I believe that is true, I don’t think that’s why Obamacare has been structures so shoddily. They have been crafting healthcare legislation for years. Their goal has always been single payer. With prices like this and with the initial penalties being around $100 for an individual, they have set up a system that will have many demanding single payer to rescue the whole train wreck that Obamacare creates.

And I stand by that. Unfortunately you don’t have enough intelligence or capability to make an argument, so as usual do a hit and run away.

lester on February 1, 2013 at 4:40 PM

You of the twenty-something generation are the biggest collection of freaks ever to grace this planet. You are so warped in your pathological lying that you actually practice it on an hourly basis with zero shame.

You are the perpetual adolescent teenagers. So little experience and knowledge, but convinced you know it all.

Hmmm, my employer’s “large” group major medical health plan covers employee and famly for a 13,800 annual premium. This before the employer kicks in the 4,100 annual to cover the employee. When this largesse, the employer has merely 18% employee participation in the plan.

…and another thing. Does anyone else find the term ‘uninformed voter’ just a little bit PC..and therefore irritating?

Yer a goddamned appethetic, ignorant moron.

It grates me in the same kind of way the PC crowd calls @$$hole people that tailgate the hell out of you when there’s 45 cars ahead of you going the same speed, switch lanes 14 times in a half mile to get that coveted 2 car length advantage and have no idea what ‘Yield’ or ‘Merge’ even mean..

Is it the case that the average family that filed for bankruptcy before had the money to pay for insurance but didn’t? Then, when they were hit with medical costs, they went bankrupt? If that is the case, I suppose a law mandating that they buy insurance would work since they already have the money.

However, if it’s the case that they didn’t have insurance then because they couldn’t afford it, what about Obamacare will allow them to afford it now?

If they can’t afford $20,000 in insurance (and that seems entirely likely), won’t they just pay the much smaller penalty?

And, if they pay the penalty, won’t they still be uninsured?

And, if they are uninsured, won’t they still end up getting saddled with debt if they have a medical situation that costs a lot to resolve?

Does Obamacare do anything to address that?

Since all of the groups that research these things now acknowledge that it doesn’t keep the premiums down and it doesn’t lower the costs of medical treatment, it seems that there is actually a small group of people that will no longer be at risk – the people that could have bought insurance but didn’t.

I sent the link to my brother and he got it too late. He used to print out that Bush peso and send it with the paid postage RNC solicitations. I told him the new and improved Rubio peso was Louvre worthy.

Ah, home, well pretty close anyway, nice pic, love those, if I was home I would share some of the old with you, got one of my Pop(grandfather) at the bay bridge tunnel releasing pigeons, that he was training for the fall races, that thing has changed so much. Thanks for the nostalgia Bmore, love being reminded of my marshy home:)

This is what you get when the government colludes with insurance companies to develop the required coverage for health insurance and then mandates your purchasing it. No wonder AARP was such a big supporter.

I haven’t read all the comments here. But the obvious thing about this is if the average family had $20,000 extra to spend every year, they could use that to pay their own medical bills. You wouldn’t need regular health insurance. Buy a catastrophic policy for the family (fairly cheap) and use the rest of the money for doctor visits. You’d still have massive savings at the end of the year.

I still love how the IRS is the one managing all of this.

Here’s the key phrase in this story..

IRS set in law the rules for implementing the penalty Americans must pay if they fail to obey Obamacare’s mandate to buy insurance.

“…Americans must pay if they fail to obey…” Yeah.. ObamaCare is all about our health.
I love the useful idiots who think socialized medicine is so freaking wonderful and private care isn’t.

The whole argument against the private health industry is they aren’t covering you. Then what’s the first thing the government does once they take over because the private industry wasn’t covering everybody? The limit care. Ration treatments. Create death panels. Invoke heavy penalties for not “obeying.”

If it’s all so freaking wonderful why do they threaten people with heavy penalties for “not obeying?”

We don’t have to overturn this atrocity. We just need to pass a new “ObamaFreakingCare Amendment Act. Strip the IRS of all of it’s ObamaCare powers. Make it fully a free choice and you are only taxed if you choose to participate.

And when you lie to congress it’s a felony. And when they lie to you it’s just politics.

Half of congress should probably be in jail. At least a third. They should be stripped of every single penny they made while in government. No retirement. Nothing. Then the leadership should not be allowed to have any employment other then used car sales or cleaning public toilets. What the left has done to this nation is a crime. And would be if they were treated the same as they have treated corrupt private citizens in charge of major corporations.

I served in the military 34 years to qualify for a health care premium at a discounted rate. Tri-Care gold and Tri-Care Prime were a great deal for those who put in the time.

I have been told by the liberal trolls supporting this monster that I was everything from stupid to a liar for fearing the AHCA would screw up what I worked for to earn and my health care premiums would quadruple. If all of this holds true, it will more than quadruple.

Thanks, you stupid, mindless idiots who cannot do a single thing to take care of your own affairs.

Been talking about that with the wife, I actually told her not to plan on us getting a retirement for very long if at all either, plus the over 40 mile rule on our health care is obviously another concern, especially for our plans, it automatically takes us out of running for Tri-Care prime. We’ll see how this goes, and some of my buddies are in the seminars in the next few months, we’ll see what they are being told.

Hey, Lester. I’ll give you an argument. As an attorney I handle bankruptcy cases. By far and away the biggest single causative factor I personal bankruptcies is consumer credit card debt. It is not medical expenses, though in a few cases they can be perceived to be a contributing factor. Tell me, should I believe you or my lying eyes? Since medical expenses are unsecured consumer debt they get discharged just like credit cards and thus, debtors include them in their debt schedules, so while medical expenses may appear in virtually all individual chapter 7 filings, they do not, in the vast majority of cases, comprise the majority of the debt and certainly do not cause the bankruptcy filings.

Someone, anyone, name one country with a population in excess of 300,000,000 people that has universal health “free” health care capable of providing the type of advanced care that the medical profession has been able to provide to just about the entire population of the United States of America. Oh and one other qualification, the country must be solvent. And, please, don’t even try to suggest China, India or Russia, because to do so is a bald faced lie as they have neither universal nor superlative health care; and I make that assertion on the best of authority from actual residents of those countries.

Hey, Lester. I’ll give you an argument. As an attorney I handle bankruptcy cases. By far and away the biggest single causative factor I personal bankruptcies is consumer credit card debt. It is not medical expenses, though in a few cases they can be perceived to be a contributing factor. Tell me, should I believe you or my lying eyes?…

totherightofthem on February 1, 2013 at 11:39 PM

He doesn’t care. Not one bit. The facts are unimportant to his religion. He’s evangelistic, even after being repeatedly shown where he’s wrong in this particular faith-based political belief of his.

From one of my earlier hit-and-run-away posts where I didn’t have enough intelligence or capability to make an argument (which explains all the stupid links and useless citations):

…Seventy-three percent had less than $1000 of medical expenses in the two years leading up to their bankruptcies. Says so in the study. Wait, folks went bankrupt with less than $1000 in medical bills? Wow. But ta-dah, the truth comes out.

In the study, even if the person had $75k on their Sears card and six years left on their Escalade payments, so long as their medical bills were $1010 the study counted them as a “medical bankruptcy” by default. Meaning, approximately, “the numbers are crap.”…

Humorously, that’s yet another thread he fled after I pointed actual numbers out. Some might even call it a hit-and-run-away, although I wouldn’t stoop to ad hominems regarding his intelligence or capability. Maybe it was just suppertime for the next two months and he never had an opportunity to develop a thoughtful counterargument with his own numbers.

(BTW, the thread is still open if you ever found any supporting data for your statement, lester. Especially since you’re standing by it. It’s on-topic, so feel free to post it here. I know I cited the source the president used to show precisely where you were completely wrong, but that shouldn’t be too much of a problem, should it?)

Regardless, his gods told him it was the number one cause of bankruptcy, so actual numbers and verifiable facts can be safely ignored

And I stand by that.

and attacked as heresy:

Unfortunately you don’t have enough intelligence or capability to make an argument…

lester on February 1, 2013 at 4:40 PM and attacked

The hit-and-run-away comedy was just an accidental gift to us. It’s even funnier now that he’s fled this thread, too. Surely he has the intelligence and capability to post actual data…

If you think our health care system is plagued by fraud now (and it is, Medicare alone accounts for over $30 billion in fraud every year), it is going to get exponentially worse once Obamacare is in full force. What a friggin’ disaster this thing is.
AZCoyote on February 1, 2013 at 3:36 PM
Medicare is the paid into (2.9% I believe) fund for seniors; those
over the age of 65. Any fraud in this category is probably with
health providers. Seniors do not receive dental care.
Medicaid is the “free medical arm” of welfare. Most of the fraud
is more than likely in this category. Children of welfare moms
receive free dental care.
I am unsure which category persons with disabilities fall into,
however, this area is ripe with fraud also.
Amjean on February 1, 2013 at 5:01 PM

I think I can help with this one. I believe you have to be disabled for 2 years before you can get Medicare under the age of 65. The only exception is dialysis. Once you are on dialysis, you immediately qualify for Medicare. That industry must have better lobbyists than other ailments which cause full disability!!

What drives me mad is that they do not know what to tell us yet. They’re still figuring it out. The Bill that no legislator on the supporting side even read.

The only saving grace is if Tri-Care is deemed sufficient because it provides the level of care they’re talking about at a discount, I’m exactly 18.7 from Womack Army Medical Center.

When we left the military, we set up with an excellent provider in Fayetteville and thought we were good. This would pretty much guarantee not ever really retiring.

I’ve always thought society had a responsibility to do what they could for the underprivileged. But this doesn’t have anything to do with that. This Act, is the biggest wealth redistribution scheme ever devised.

As far as retirement, I really had no choice. It’s not fair to the young people we fly with if you are so busted up you’d be a hindrance to evading when you went down.

If little Susie breaks her leg on a jungle gym at school, add in another $1000 for emergency room treatment and ongoing follow-up.

That’s cute that you think that’s how much healthcare costs.

Without health insurance, surgical treatment of a broken leg typically costs $17,000 to $35,000 or more. For example, at the Kapiolani Medical Center in Hawaii, repair of an uncomplicated leg fracture costs about $16,082, while repair of a complicated leg fracture costs about $33,565, not including the surgeon’s fee. A typical surgeon’s fee could reach $2,000 or more, according to Carolina Orthopaedic Surgery Associates.

President Whistle-all-the-time would love to give this speech, over and over and over again. And frankly, he may over the next few years.

This is just not acceptable in the 21st century that people have to “live in fear” that they won’t have enough money to pay for their _______________. What we need is legislation that will provide a “sense of fairness” and “security for average Americans”. Therefore I am signing this executive order today to address this issue, “once and for all”. We can’t wait for Congress to act any longer. The time is now. Effective today people will have a right to _____________. And my cabinet will begin the process of writing the laws and rules necessary to begin a “new today for our citizens”. A new day of “fairness” and “equality of opportunity”.

Fill in the blanks with:

Healthcare

Food

Federally mandated personal security in your homes

Housing

Transportation

Guaranteed Income

Secure employment

Free college

Pre-arranged Federally provided End-of-Life care

End of Life Asset Assignment

Mandatory organ donation

It’s like a Progressive dream come true.

Darwin/Marx/Hitler/Stalin/Lenin/Engels/Mao/Pol Pot would all be proud.

I have written before and will write again that your analysis Ed is once again that Obama is just really bad at math instead of knowing full well a system that requires $20000/yr from families will cause an outcry and collapse of the free market Health System.

….

I come to HotAir to meet others who aren’t in a fog about the situation. please join that conversation and the assumptions that go with it.

…

Conan on February 1, 2013 at 4:53 PM

I agree, this conciliation, unwarranted by the facts, is disappointing.

Has anyone noticed that their employers must now state the “value” of their health plan on the W2?

Is it not now quite likely that the difference between that and the IRS $20,000 figure will be considered a taxable benefit to you, perhaps taxed as ordinary income?

So, if your plan is valued at $12K by the employer, an 8K benefit will be added to your taxable income, yielding another , say, $3K in revenue to the IRS – and all without legislation!

Perhaps the idea was to (try to) pay for Obamacare, but of course, this extra money will go into the general fund of great causes.

That’s cute if you think every broken limb involves that level of care.

hawkdriver on February 2, 2013 at 9:44 AM

? It’s still wildly off the mark. I went in for a thumb that was bothering me, it wouldn’t flex. I just messed it up somehow, but it wasn’t broken. Doc took 5 minutes to look at it and put me in a little glove thing.

$1200. No care after the fact, no followups, that’s the first visit and only visit.

If I broke a limb? Holy crap.

PS: Name one hospital that will repair a broken anything for under a grand. Just one! You can’t do it, because they don’t exist, like a lot of the other republican fantasies.